Euro Technical Forecast: EUR/USD Bears Struggle at Support

Euro Technical Forecast: EUR/USD Weekly Trade Levels

Euro makes second rebound off downtrend support on building RSI divergence
EUR/USD monthly opening-range taking shape- US Non-Farm Payrolls on tap
Resistance 1.0462, 1.0602 (key), 1.0718/77- Support 1.0352, 1.02 (key), 1.00

Euro is attempting to snap a five-week losing streak with EUR/USD up nearly 0.83% since the Sunday open. A rebound off downtrend support for the second time in as many months puts the bears on the defensive with U.S. Non-Farm Payrolls slated for Friday. Battle lines drawn on the Euro weekly technical chart into the monthly / yearly open.

Euro Price Chart – EUR/USD Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView

Technical Outlook: In last month’s Euro Technical Forecast we noted that a rebound off downtrend support threatened a larger recovery in EUR/USD while above the yearly close-low at 1.0420. We cited that, “A break / weekly close below this threshold is needed to mark downtrend resumption towards the lower parallel / 61.8% retracement at the 1.02-handle- look for a larger reaction there IF reached.”

EUR/USD broke lower the following week with a decline of more than 3.8% registering an intraweek low at 1.0224 before rebounding sharply. The focus into the start of the month is on a reaction off this slope with the monthly opening-range now taking shape just above- look for the breakout in the weeks ahead. Note that weekly momentum divergence has been identified on this last decline and leaves the bears vulnerable while above the lower parallel.

Initial weekly resistance is eyed at the 2015 swing low at 1.0462 and is backed by the 38.2% retracement of the 2024 decline at 1.0602. Note that the median-line converges on this threshold next month and breach / weekly close above would be needed to suggest a more significant low was registered last week / a larger reversal is underway. Broader bearish invalidation now lowered to the November high-week close (HWC) / February low-week close (LWC) at 1.0718/77.

Look for initial support near the 2016 swing low at 1.0352 backed by the lower parallel (currently ~1.0275). Key support remains with the 61.8% retracement at 1.02- a break / weekly close below this pivot zone is needed to fuel the next major leg of the decline towards parity.

Bottom line: A three-month sell-off takes EUR/USD into support with price marking bullish divergence into the lower parallel. From a trading standpoint, rallies would need to be limited to the 1.06-handle IF price is heading lower on this stretch with a break/ close below 1.02 needed to fuel the next major leg of the decline.

Keep in mind the January opening-range is taking shape just above support with US Non-Farm Payrolls on tap Friday- stay nimble into the release and watch the weekly close here for guidance. I’ll publish an updated Euro Short-term Outlook once we get further clarity on the near-term EUR/USD technical trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex

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